THE CITY

THE CITY; Two of Studio 54 Get Reduced Terms

Published: January 1, 1981

The former owners of Studio 54, Steven Rubell and Ian Schrager, yesterday won a reduction of the prison sentences that they received for evading $400,000 in income taxes on cash skimmed from their popular Manhattan discotheque.

Judge Richard Owen, of Federal District Court in Manhattan, who had sentenced them each to three and a half years, reduced the sentences to 20 months because they cooperated in an investigation of ''widespread tax fraud in the discotheque industry.''

The reduction should result in the release of Mr. Rubell and Mr. Schrager next March, according to Peter D. Sudler, the prosecutor in charge of the discotheque investigation.